Market Vectors makes ETF debut on ASX

Market Vectors, the exchange-traded funds business of Van Eck Global, has made its debut in Australia with the listing of four ETFs on the Australian Securities Exchange (ASX).

Market Vectors has launched four ETFs on the ASX.

The funds provide access to a range of domestic Australian sectors, including banks, property and resources.

Arian Neiron, Managing Director, Market Vectors Australia, said: “We are committed to building a presence in the Australian market place. As a global business we look forward to bringing new investment opportunities to Australian investors.”

He added: “What sets our ETFs apart is the rigorously designed methodology and rules governing the construction of the underlying indices. Each ETF is based on a Market Vectors’ purpose-built pure play index, which seeks to provide better liquidity, tradability and diversification while reducing stock concentration issues that are typical of some ETFs based on traditional indices.”

With the addition of these four funds, the number of exchange-traded products listed on the ASX stands at 90.

According to Neiron, Australia’s ETP industry will continue to grow on a similar growth trajectory it has experienced in recent years: “Australia’s ETP industry reached approximately A$9 billion market capitalisation in September, an increase from A$6.8 billion in January 2013. Several factors have changed the landscape for ETFs in the past few years: Future of Finance (FoFA) reforms banning conflicted remuneration to advisers; investor demands for lower costs, transparency and liquidity; investors opting for a Self-Managed Superannuation Fund (SMSF); and a trend among investors towards direct investments. All of these factors have all favoured a shift towards ETFs.”

He continued: “We believe higher demand will come from SMSFs, the fastest growing segment of the superannuation sector with about A$500 billion in assets, attracted by the ease of diversifying their portfolios without having to pick stocks.”

The four new funds are as follows:

Market Vectors Australian Banks ETF (MVB)Based on the Market Vectors Australia Banks Index, a pure-play Australian sector index which tracks the performance of the largest and most liquid ASX-listed companies that generate at least 50% of their revenue or assets from the Australian banking sector. The index has a minimum of 6 holdings, with constituents’ weights capped at 20%. The ETF is the first on the ASX to offer investors a single investment with unique and targeted exposure to the Australian banks. It has a management fee of 0.28% p.a.

Market Vectors Australian Resources ETF (MVR)
Based on the Market Vectors Australia Energy & Mining Index, a pure-play Australian sector index which tracks the largest and most liquid ASX-listed local companies that generate at least 50% of their revenue or assets from the resources sector globally, and foreign companies that generate at least 50% of their revenue or assets from the Australian resources sector. The index employs a unique cap-weighted methodology removing the large-capitalisation biases to BHP Billiton and Rio Tinto inherent in traditional Australian-based indices by capping the maximum weighting to one entity at 8%. A minimum of 20 companies are tracked ensuring diversity. It has a management fee of 0.35% p.a.

Market Vectors Australian Emerging Resources ETF (MVE)Based on the Market Vectors Australia Junior Energy & Mining Index, a pure-play Australian sector index which tracks the most liquid small cap ASX-listed local companies that generate at least 50% of their revenue or assets from the resources sector globally, and foreign companies that generate at least 50% of their revenue or assets from the Australian resources sector. It has a minimum of 20 holdings with individual constituent weights capped at 8%. The ETF is the first on the ASX to offer investors exposure to small-cap energy and mining companies. It has a management fee of 0.49% p.a.

Market Vectors Australian Property ETF (MVA)
Based on the Market Vectors Australia A-REITs Index, a pure-play Australian sector index that tracks the performance of the largest and most liquid ASX-listed Australian Real Estate Investment Trusts (A-REITs). The index has a minimum of 10 A-REITs and maximum weight cap of 10%. It had a management fee is 0.35% p.a.